If you’re thinking about marriage or your relationship is getting serious, it’s important to discuss your attitudes to money with your partner.
By considering your current financial situation - including any assets or debts you may each be bringing to the table - you’re setting a solid foundation for the future.
Taking things one step further, you may consider using a pre-nup – or pre-nuptial agreement – to clarify what will happen to your assets should your relationship not stand the test of time.
What is a pre-nup, anyway?
You’ve probably heard the term ‘pre-nup’ on US TV shows or movies; in Australia it’s known as a financial agreement.
A financial agreement is a contract that sets out how your property and assets will be divided if your relationship breaks down.
Most people think these agreements need to be put in place before getting married, but financial agreements can be entered into before, or during, a relationship, and they can be made between partners in both married and de facto relationships – including same sex relationships1.
If your relationship fails, your assets and liabilities will be divided according the agreement.
Why might we need one?
Recent figures show that while the number of Australians getting divorced has fallen, one in three marriages in Australia still ends in divorce.2
The financial fallout of divorce means reduced savings and assets, and on average it takes around five years for individuals to recover financially after going their separate ways.3
Given these statistics, it makes sense to protect yourself.
Financial agreements are especially useful if one of you is bringing more assets to the relationship than the other, or if one partner is in line to receive a substantial inheritance.
They also make sense if either one of you - or both - has children from a previous relationship you want to protect financially, or if you simply want to avoid going to court if your relationship ends.
How do we set up a financial agreement?
A valid financial agreement can be drawn up by an experienced family lawyer.
It must comply with strict legal requirements and you need to prove that both partners received individual legal advice before signing the agreement.
With research indicating that disagreements about money are a major cause of divorce, a good place to start is to discuss your goals - both financial and personal - with your partner to see if they align.
Our new AMP Bett3r Account can help you control your budget and set savings targets to reach your goals, and by logging into My AMP you can create an overview of your finances across your various bank, credit card, loan, superannuation and investment accounts by adding your non-AMP accounts.
For more information about financial agreements, speak to your financial adviser. If you don’t have a financial adviser, our online tool can help you find one.
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